Saturday, August 05, 2017

Housing Authority To Cough Up $230K To Settle Fair Housing Lawsuit Alleging Race Discrimination, Sexual Harassment, Failure To Maintain Apartments In Safe Condition

In Anderson, Indiana, The Herald Bulletin reports:
  • The city of Anderson Housing Authority would pay $230,000 under a proposed agreement to resolve a federal housing lawsuit in which Westvale Manor residents alleged sexual harassment, racial discrimination and failure to maintain apartments in a safe condition.

    The housing authority, which operates the apartment complex, does not accept any blame for wrongdoing in the proposed agreement that has not been approved in U.S. Southern District court.

    As proposed, Wanda Sykes and Tonya Brown, two former residents of Westvale Manor, would receive $30,000 each.

    Sykes said Friday she has received $1,500 in three payments as advances on the settlement.

    “Things aren’t really adding up,” she said. “I don’t believe they have my best interests in the case. We’re waiting for the judge to review the consent agreement.”

    They were joined in the 2016 federal lawsuit by the Fair Housing Center of Central Indiana, which would also receive $30,000.

    Both women have moved from the federally subsidized apartments near 25th Street and Raible Avenue.

    The remainder of the monetary award, about $140,000, would be split among attorneys in the case, according to a copy of the proposed consent decree obtained by The Herald Bulletin.
    In the 2016 lawsuit, the two residents and the Fair Housing Center alleged that the housing authority disregarded complaints by residents because a majority of Westvale residents are black.

    “AHA so consistently and deliberately disregards complaints by Westvale’s black residents that most long-term tenants long ago gave up asking AHA for help,” the initial complaint alleged.

    Among the complaints, according to the lawsuit:

    Leaks: One resident slept in her living room because of a leak in her bedroom; three more residents reported leaks in bathrooms; and another said her ceiling collapsed after being soaked with water from a leak.

    Mold: Nine tenants reported visible mold. One resident tested mold in her unit and shared the results — a “dangerous” rating — with Weatherly, who was the head of maintenance for AHA before becoming director of the housing authority. He did nothing to address the mold problem, the lawsuit alleged.

    Shower curtains for doors: Several residents said that when their closet doors broke, the AHA replaced them with shower curtains.

    Harassment: One woman, identified as Jane Doe, said she was sexually harassed by two maintenance workers. One of the workers told her she would have her carpets cleaned faster if she performed a sexual act. Another maintenance man allegedly touched her breasts on more than one occasion when she walked past him in a stairway.
For the story, see Westvale settlement proposal totals $230,000 (Housing authority staff would undergo training; policy changes required).

NYC Feds Squeeze HOA, Management Company For $125K Settlement Of Fair Housing Lawsuit Accusing Defendants Of Rejecting Request By Buyer w/ Disabilities To Put Ownership Of Co-Op Apartment Under A Legal Trust

In White Plains, New York, Westfair Online reports:
  • A White Plains housing cooperative and its property manager have agreed to pay $120,000 to a disabled man whose application for an apartment they rejected.

    West-Ex Associates Inc., a property management company in Hartsdale, and 505 Central Avenue Corp., owner of Tompkins Manor, a 155-unit co-op in White Plains, settled a lawsuit on July 20 with the U.S. Attorney’s Office over violations of the Fair Housing Act.

    The government sued the companies in January on behalf of Michael Forster, 34, of Port Chester, and a trust created by his parents.

    The Forsters two years ago reported the incident to the U.S. Department of Housing and Urban Development and HUD determined that there was reason to believe that Tompkins Manor had discriminated against them.

    Michael Forster, according to the lawsuit, has congenital heart problems and has suffered multiple heart attacks. He has learning disabilities and bouts of depression. His abilities to work, drive or manage money are limited.

    In 2005, his parents, Denis and Enid Forster, established an irrevocable trust to ensure that he could support himself even after their deaths.

    In 2008, Forster moved from his mother’s home to a boarding house in White Plains that he shared with nine other residents. The house was infested with rodents, bedbugs and cockroaches, according to the lawsuit. There were frequent electricity outages, inadequate heat, no laundry facility and no elevator.

    His parents sought better housing – a place close to shopping, a laundry, doctors’ offices and his mother’s home – to give him a measure of independence.

    In 2013, a real estate broker found three available one-bedroom units in Tompkins Manor. The trust bid $76,000 for one of the dwellings and the seller accepted the offer.

    A West-Ex employee rejected Forster’s application, stating that the co-op does not permit ownership by a trust. The family followed up with calls and letters. They noted that Denis Forster was willing to guarantee the financial obligation.

    Attorney Steven Accinelli, according to the lawsuit, notified the Forsters by email that West-Ex and Tompkins Manor would not consider any accommodation for Michael Forster. He suggested that they try other co-ops and management companies.

    The rejection devastated Forster.

    “Michael grew increasingly depressed, as he realized that he would have to continue in the boarding house with its abysmal conditions,” the lawsuit states. “He became anxious that all cooperative buildings would treat him in the same manner.”

    In the midst of looking for another place to live, Forster suffered a heart attack in 2014. He was hospitalized for a week. Convalescing in the boarding house, with no elevator to his floor, was out of the question, so he was released to his mother’s one-bedroom apartment.

    Eventually, the Forsters bought an apartment in Port Chester. Though better than the boarding house, the lawsuit states, it had significant drawbacks in comparison with Tompkins Manor. It is not near a grocery store or other places that would be easy for Forster to get to, the lawsuit states, and it is farther away from his mother’s home.

    Acting U.S. Attorney Joon H. Kim announced the civil rights settlement on July 21, the day after it was signed by federal Judge Nelson S. Roman.

    According to the settlement:

    • West-Ex and 505 Central Avenue Corp. agreed that they will not discriminate on the basis of a disability in the sale or rental of dwellings;
    • They will not refuse to make reasonable accommodations to people with disabilities;
    • They will adopt policies and guidelines for handling requests for accommodations by people with disabilities;
    • They will conduct annual training for all employees on fair housing regulations; and
    • They will keep records of any fair housing complaints for the next three years.

    In addition to paying $120,000 to the Forsters, they must pay a $5,000 civil penalty to the government.

    West-Ex also must provide reasonable accommodations to applicants to any cooperative, condominium board or property owner it represents.

    If Forster tries to buy a unit in Tompkins Manor, West-Ex and 505 Central Avenue Corp. must consider his application and may not interfere with his rights under the Fair Housing Act.
Source: Tompkins Manor settles fair housing lawsuit with $120K payment.

For the U.S. Attorney press release, see Acting U.S. Attorney Settles Civil Rights Suit Against Westchester Property Management Company And Cooperative Building For Discriminating On The Basis Of Disability (Defendants to Pay $125,000 in Damages and Penalties, Adopt Reasonable Accommodation Policies and Implement Training Programs).

Connecticut Landlord, Real Estate Agent Each Cough Up $25K To Settle Fair Housing Allegations That They Rejected Prospective Tenant Based On Refusal To Accept Section 8 Housing Subsidy As Part Payment Of Rent In Violation Of State Law

In Danbury, Connecticut, The Connecticut Law Tribune reports:
  • The Connecticut Fair Housing Center notched a $50,000 settlement against a landlord and a real estate agent accused of not allowing a tenant to pay some of her rent with a federal Housing Choice Voucher, also known as Section 8.

    While the settlement finalized in late May stressed the agreement was made without admitting liability, housing law experts said the practice is common in the Nutmeg state. The woman in question was attempting to move into a Danbury townhouse apartment.

    "I would say that, over the course of my 20-plus years as a legal services attorney, it is common knowledge among many legal aid attorneys that some landlords up-front refuse to take Section 8 as rent payments," said Jan Chiaretto, executive director of the Wethersfield-based Statewide Legal Services.

    Chiaretto added that it's been illegal in Connecticut since 1990 to discriminate against someone because of the source of their rent.

    "In some cases, some landlords do not know the law," said Chiaretto, who was not involved in the settlement. "A lot of it is ignorance and also the dislike of involvement with a government-backed voucher program. For some landlords, it might seem complicated and something they do not want to get involved with."

    While it's not clear how many of the approximately 36,000 Connecticut residents who receive Section 8 have been denied housing illegally, Chiaretto noted: "Anecdotally, it seems to be a pervasive problem. It remains a barrier of access to decent affordable housing for low-income people. One rejection is one rejection too many."

    Mediation in the case of prospective tenant Barbara Capri against Danbury property owner Barbara Blauvelt and real estate agent Alfred Surprenant failed. The parties finally reached a settlement after the Connecticut Commission on Human Rights & Opportunities began an investigation.

    According to Capri's four-page complaint with the commission, she was looking to move into a South Street townhouse that was significantly newer and more updated than the home she was living in. The complaint claims Sarah Becker, a licensed real estate agent Capri hired, contacted Surprenant about the unit. "On May 23, 2016, Mr. Surprenant responded to Ms. Becker by telling her that tenants utilizing Section 8 vouchers would not be considered for the South Street unit."

    Section 8 is a federal housing assistance program designed to make housing affordable for those whose income will not cover rent.

    The CHRO complaint states that because of being denied the housing of her choice, Capri "suffered severe emotional distress, violation of her rights, and economic damages."

    In legal papers, Blauvelt said she never discriminates against people using Section 8 and Surprenant said he couldn't remember Capri's case.

    Surprenant and Blauvelt each paid Capri $25,000, for a total settlement award of $50,000. In addition, Surprenant was required to take a two-hour housing training course with the commission.

Friday, August 04, 2017

Tenant-Victims Of NYC Apartment Building Explosion Allegedly Caused By Illegal Gas Delivery System Move To Request Freeze Of Landlord's Assets Pending Dozens Of Civil Lawsuits, Manslaughter Charges

In New York City, The Real Deal (New York City) reports:
  • Victims of the deadly 2015 building explosion in the East Village want compensation, and they are going after landlord Maria Hrynenko to get it.

    Hrynenko, the former owner of the property where a gas explosion destroyed three buildings, faces dozens of lawsuits and manslaughter charges for her role in the explosion — she allegedly used an illegal cost-cutting gas delivery system. To cover her legal costs, Hrynenko was forced to sell the now rubble filled lots.

    On May 2, Yaniv Shaky Cohen’s Nexus Building Development Group Inc. — called Avenue Second Owner LLC in the sale documents — purchased 119 and 121 Second Avenue for $9.15 million, according to public records.

    But victims worry that they will never see their slice of that cash. To ensure they get their due, the victims have filed a legal motion asking that a judge forbid Hrynenko from “removing, destroying, selling, assigning, gifting, encumbering and otherwise disposing” of cash from the sale, according to the New York Post.

Use Of Land Contracts In Sale Of Real Estate In Indiana Generally Treated As Outright Sale & Purchase, Equitable Mortgage Requiring Foreclosure, Not Forfeiture, In Event Of Default

In Indianapolis, Indiana, the Indianapolis Star reports:
  • Indiana law has few protections for people who purchase a house with land contract, a shortcoming that consumer and housing advocates say places vulnerable buyers at risk.

    Still, the approach is attractive and increasingly common among individuals and families unable to obtain tradition financing, according to Amy Nelson, executive director of the Fair Housing Center of Central Indiana. That’s because buyers often can get into a contract with little or no money down, followed by affordable monthly payments over a set number of years.

    The gamble is whether the buyer, often financially distressed to begin with, will have the money or be able to obtain a loan when the balloon pay-off comes due. If they can’t — and default — the property reverts to the seller. The buyer walks away with nothing. There is no equity for the money they have paid the seller or improvements that were made.(1)

    Land contracts have been used for decades by individuals selling their homes or land. But recently, Nelson said, they are being used more often by businesses that sell homes in large-scale variations on rent-to-own deals. For instance, an IndyStar investigation found one such seller, Chart Properties LLC, has issued more than 100 contracts to buy and sell homes in a process that is not covered by Indiana’s real estate licensing law.

    Nelson said there should be a cap on how many homes a person or business can sell via contracts without a real estate license, which is required in Indiana to sell property a seller does not own

    “I would hope that maybe … once you are doing so many transactions a year that you would switch from being that mom-and-pop selling your own home, moving and trying to do it yourself, versus somebody who is in the business of so-called selling those homes,” she said.

    Chart President Robert “Bob” Keck explained to IndyStar that he does not need a real estate license because Chart claims ownership of homes it is buying on contract. He said Chart’s attorneys have thoroughly researched their legal standing and the company also has a supporting opinion issued in by the Indiana Attorney General.

    With a growing number of people purchasing homes via contracts — without the protections that come with transactions regulated by real estate licensure laws and mortgages — Nelson said the message is “buyer beware.”

    The central problem with these land installment contract is that they exist in this no-man’s land in between where the potential home buyer has none of the protections of home ownership and none of the protections of being a tenant in a traditional lease,”(2) said Sarah Bolling Mancini, of counsel to the National Consumer Law Center and co-author of a 2016 report that called contract sales “toxic” and “predatory.”
For the story, see Indiana has few protections for those who buy homes with a land contract.
(1) While there may not be any statute in Indiana addressing this point, the Indiana case law makes abundantly clear that, except in two limited circumstances (ie. in the case of an abandoning, absconding vendee, and where the vendee has acquired very little, if any, equity in the property), a sale of real estate on a land contract is treated as an outright sale and purchase, with the payments due on the land contract being treated as payments on an equitable mortgage; and upon default, there is no automatic forfeiture of the property, but rather, the remedy for the seller is to bring a foreclosure action in the same way a traditional mortgage lender forecloses on a mortgage, with the buyer having a corresponding right of redemption.

For a discussion on this principle as it is applied in Indiana, see Skendzel v. Marshall, 261 Ind. 226, 301 NE 2d 641 (Ind. 1973), and the subsequent cases thereunder.
  • This Court has held, consistent with the above notions of equitable ownership, that a land contract, once consummated constitutes a present sale and purchase. The vendor "`has, in effect, exchanged his property for the unconditional obligation of the vendee, the performance of which is secured by the retention of the legal title.'" Stark v. Kreyling, supra, 207 Ind. at 135, 188 N.E. at 682. The Court, in effect, views a conditional land contract as a sale with a security interest in the form of legal title reserved by the vendor. Conceptually, therefore, the retention of the title by the vendor is the same as reserving a lien or mortgage. Realistically, vendor-vendee should be viewed as mortgagee-mortgagor. To conceive of the relationship in different terms is to pay homage to form over substance. See Principles of Equity, Clark, 4th edition, Sec. 9, p. 23.

    The piercing of the transparent distinction between a land contract and a mortgage is not a phenomenon without precedent. In addition to the Stark case, supra, there is an abundance of case law from other jurisdictions which lends credence to the position that a land sales contract is in essence a mortgage: [...]
Editor's Note: It should be noted that while Skendzel v. Marshall was decided over 40 years ago, it appears to continue to be valid case law in Indiana, inasmuch as the case has been cited at least three dozen times by the state supreme court and intermediate appeals court combined since the year 2000.

Thursday, August 03, 2017

Virginia Man With History Of Ripoff Convictions Again Finds Himself In Hot Water, Stands Accused Of Fleecing Dozens Out Of Over $750K In Variety Of Real Estate Rackets; Local DA Drops Earlier Charges As Richmond Feds Step In, Take Over Prosecution

In Richmond, Virginia, the Richmond Times-Dispatch reports:
  • A Chesterfield County “credit consultant” alleged to have victimized dozens of local people out of more than $750,000 pleaded not guilty in federal court Wednesday [July 26].

    Timothy Scott Wenk, 50, who was indicted July 11 on one count of wire fraud, entered the plea before U.S. District Judge Henry E. Hudson, who set a two-day jury trial to begin Sept. 12. If convicted, he faces up to 20 years in prison and a $250,000 fine, and he could be required to pay restitution.

    Authorities have said the case is still under investigation, and on Wednesday, Brian R. Hood, an assistant U.S. attorney, told Hudson that he expected there would be another indictment in the near future that could require a longer trial.

    The current indictment alleges that from December to May, Wenk falsely agreed to sell a property that he did not own, on Breaker Point Court in Chesterfield, to three people who paid him a total of more than $12,600 toward the purchase.

    But a 10-page criminal complaint filed by the FBI last month alleges many additional offenses and victims, a few of whom appeared to be in the courtroom Wednesday for Wenk’s arraignment.

    Wearing yellow jail coveralls, the silver-haired defendant told Hudson on Wednesday that he was a graduate of Manchester High School when asked about his education.

    Authorities said Wenk owns Premier Credit Consultants in the 11900 block of Hull Street Road, which purportedly arranged financing for clients to buy real estate regardless of their credit score or income and also offered credit repair services.

    He was arrested by Chesterfield police on Feb. 28 on charges of obtaining money by false pretenses. Media coverage “prompted the discovery of dozens of additional victims who contacted law enforcement officials,” wrote James R. Conner III, an FBI special agent, in the complaint.

    To date, there are more than 70 victims experiencing losses of more than $750,000 because of fraud committed by Wenk,” Conner alleged. The complaint outlined what allegedly happened to five victims.
    Wenk has a history of convictions for obtaining money through false pretenses in Chesterfield. Court records show the Chesterfield charges from February were dropped June 15, the same day he was arrested on the federal charge.

    He is being held in detention pending trial.

Family Buys Fixer-Upper & Pours $70K Into Renovating It, Only To Discover Undisclosed Lien On Premises Is Now In Foreclosure

In Dallas, Texas, KDAF-TV Channel 33 reports:
  • Buying a house can be a huge headache, but this goes way beyond that.

    Jose Inez Palma purchased a house in South Dallas a little over two years ago for $8,000. Since then, they’ve poured 70 grand into it, replacing boarded-up windows, covering broken-out floors and re-doing the entire electrical and plumbing system.

    The problem is, it was all a scam. The people who sold them the house no longer owned it.

    “I got the house over the internet and we’re a big family,” Palma said through an interpreter. “I feel like they lied to us. We put our entire life savings into this house.”

    Now the house is being foreclosed upon and put up for auction. According to the auction website, the occupancy status is “Unknown”, but with nine people living here, it’s pretty apparent.

    The scam isn’t even a rare one. The family living next door is in the same situation, conned into buying a home the seller didn’t technically own.

    For Jose and his family, the situation is leaving them with few options.

    “They are desperately looking for a solution. However, they are very limited with funds and it’s difficult when you don’t have money to make a move,” said Lisette Caraballo. “Everything that they have is invested in this house.”

    Caraballo volunteered to work with the family to try and stop or at least delay the imminent foreclosure and auction. They’re even willing to pay the mortgage on the home despite all they’ve already spent on it.

    It’s a last desperate move to try to hold onto their home.

Wednesday, August 02, 2017

State Bar Requests 1-Year Suspension, $280K In Restitution From Lawyer Who Allegedly Disguised His Loan Modification Racket As "Foreclosure Defense Litigation"

In Los Angeles, California, the Northern California Record reports:
  • Pasadena attorney Stephen Rawliegh Golden face a year of suspension and an order to pay restitution in what he allegedly called foreclosure defense litigation that turned out to be an illegal loan modification services, according to a recent California State Bar filing.

    Golden allegedly charged and collected upfront fees for loan modification services, which is a violation of California's civil code, according to the 31-page decision filed June 28 by the state bar. In addition to the suspension, Golden must pay nearly $280,000 in restitution plus interest, according to the decision.

    Golden was charged with 26 counts of professional misconduct in 11 client matters, according to the decision. The state bar's court found Golden culpable of all but one of those counts.

    The state bar's decision is pending final action by the California Supreme Court, an appeal before the state bar's Review Department or expiration of time in which parties to may request further review within the State Bar Court.

Convicted Loan Modification Scammer Back In Hot Water; State AG: Suspect Committed I.D. Theft In Effort To Hide Assets That Could Be Used To Pay $348K In Restitution In Connection With Earlier Escapades That Ripped Off Financially Struggling Homeowners

From the Office of the Michigan Attorney General:
  • Michigan Attorney General Bill Schuette today announced he has filed four felony charges against Steven Barry Ruza, 54, of Shelby Township.

    The charges stem from allegations that Ruza committed identity theft in an effort to hide assets that could be used for restitution to the department. Ruza owes $348,025.50 in restitution to the Department of Attorney General’s Foreclosure Rescue Scam Victim Restitution Fund from his previous conviction of conducting a criminal enterprise for running a bogus mortgage scheme.

    “This individual shows a clear disregard for the law. Less than one year after admitting guilt in a scheme that scammed many, out of not only their money but their homes, he is allegedly breaking the law once again in order to avoid his legal obligations,” said Schuette.

    The charges filed against him are as follows:
  • One count of Perjury, a 15-year felony;
  • One count of False Statement in Application for Certificate Title, a 10-year felony;
  • One count of False Certification – Driver’s License, a five year felony;
  • One count of Identity theft, a five-year felony.
  • Ruza was arraigned before Magistrate Mark Blumer in the 55th District Court in Ingham County on Thursday, July 27. Bond was set at $150,000 cash/surety. As a condition of bond, Ruza was ordered to turn over all driver's licenses and passports in his name or any other name. His next court date is scheduled for August 3, 2017.

    Ruza was previously sentenced to one year in county jail in 2015 and was released on September 12, 2016. He is currently serving five years probation for his previous conviction.

    Case Background

    In 2015, Ruza and his business were charged with multiple felonies for stealing hundreds of thousands of dollars from his clients who were facing mortgage foreclosures and seeking assistance. He pleaded guilty to Conducting a Criminal Enterprise in 2015 and was sentenced to one year in county jail, five years’ probation, and ordered to pay $610,000 in restitution. $250,000 was paid to the victims and the other $360,000 was owed to the State of Michigan. Ruza’s victims were repaid at the time of Ruza’s guilty plea through Michigan’s Foreclosure Rescue Scam Victim Restitution Fund, meaning the restitution he owes must now be paid back to the state.

Tuesday, August 01, 2017

Real Estate Operator/Attorney Under Suspicion Of Running Racket That Dupes Winning Bidders At Foreclosure Sale Auctions Into Thinking That They're Bidding On Free & Clear Properties, Confusing Even Experienced Investors

In Clearwater, Florida, the Tampa Bay Times reports:
  • For the second time in six weeks, a company connected to lawyer Roy C. Skelton stood poised to profit from a Pinellas County foreclosure auction that confused even experienced real estate investors.

    Like the case of a gulf-front condo that sold for $458,100 in June to an unsuspecting bidder, a Largo townhouse sold for $112,300 last week to a man who thought he was bidding on a first mortgage and would own the home free and clear.

    In both cases, the auctions involved second mortgages and amounts far higher than what a Skelton-connected company had paid for the properties.

    "One of the (many) things that is so dangerous and deceptive about this scheme is that even with a formal title search, a bidder wouldn't be clearly warned about what was occurring here,'' according to a motion filed Tuesday by attorney Matthew Weidner, who represents the winning bidder for the Largo townhouse.

    After realizing he would not own the home outright, the bidder declined to pay the $112,300, which was due Monday. However, he will still forfeit more than $5,500 in deposits unless he can convince a judge there was a problem with the auction.

    Meanwhile, the high bidder on the gulf-front condo is still fighting to get back its $458,100. The Pinellas clerk's office has stopped payment on a check it wrote to Skelton's Deutsche Residential Mortgage Company and — despite Skelton's threatened legal action against the clerk — will not disburse the money without a court order.

    A hearing in that case is set for Aug. 21.

    Skelton, a Clearwater lawyer and real estate investor, denied any intent to deceive or mislead potential bidders.

    "Everything is filed in the public records for all who bother to look will see," he said in an email Tuesday to the Tampa Bay Times. "If a potential bidder is misinformed it is solely due to their failure to do the due diligence that the law requires. There is even a link to the final judgment on the bidding web site for every foreclosure sale. As the Florida Supreme Court has stated, when it comes to judicial sales, the rule is caveat emptor.''


Arizona AG Scores $240K+ Civil Judgment Against Real Estate Operator Who Used False Promises To Dupe Financially Strapped Homeowners Into Signing Over Control Of Their Homes, Then Using Properties In Rent-Skimming Racket

From the Office of the Arizona Attorney General:
  • Attorney General Mark Brnovich announced his office obtained a $241,401 judgment against Mortgage Relief Solutions, Inc. and its owner, Eric David Brown. The judgment also prohibits Mortgage Relief Solutions and Eric Brown from engaging in mortgage or real estate-related activity in Arizona.

    In March 2017, the Arizona Attorney General’s Office filed a consumer fraud lawsuit against Mortgage Relief Solutions, Inc. (“MRS”) and Eric Brown. The State alleged MRS and Brown targeted homeowners who were “upside down” on their mortgages and were considering defaulting on their mortgage loans. According to the lawsuit, MRS and Brown falsely claimed they would take over the homeowners’ mortgage payments, thereby allowing them to “move on” and avoid further negative consequences to their credit ratings.

    MRS allegedly told its clients that it had tenant buyers ready to move into their homes and that those tenants had the ultimate goal of purchasing the homes. MRS and Brown allegedly directed MRS’ clients to sign documents that had the effect of giving control over their homes to MRS, Brown, and persons and entities acting in concert with them.

    The State alleged that MRS failed to make promised mortgage payments for its clients, resulting in the clients’ homes going into foreclosure with negative impacts to the homeowners’ credit ratings. The State also alleged that, to the extent that MRS actually had tenants living in its clients’ homes, MRS failed to apply rent payments to its clients’ mortgages and instead retained the funds for MRS’ and Eric Brown’s own use.

    The State obtained a judgment after neither Mortgage Relief Solutions nor Eric Brown contested the State’s allegations brought against them in a Consumer Fraud Lawsuit. The judgment prohibits MRS and Eric Brown from engaging in any activity related to mortgage origination or modification, consumer debt relief, consumer debt modification, real estate sales or leases, or trustee services in the State of Arizona or conducted on behalf of any Arizona consumer. MRS and Eric Brown are also required to pay $241,401 to the State for consumer restitution, civil penalties, costs and fees, and disgorgement of ill-gotten gains.

Monday, July 31, 2017

Jury Slams Crackpot With Guilty Verdict For Attempts To File Over $1.75 Million In Retaliatory Liens On Real & Personal Property Belonging To Federal Judge, NJ Governor, Other Gov't Officials, State Of Florida

From the Office of the U.S. Attorney (Tampa, Florida):
  • Acting United States Attorney W. Stephen Muldrow announces that a federal jury has found Wayne St. Aubyn Smith (50, Parrish), a/k/a Wayne Smith El-Bey, guilty of attempting to file a false lien against a federal judge. He faces a maximum penalty of 10 years in prison. A sentencing hearing has not yet been set.

    Smith was indicted on March 14, 2017.

    According to testimony and evidence presented at trial, in May 2015, Smith filed a lawsuit against several New Jersey officials in U.S. District Court in New Jersey, claiming that his constitutional rights had been violated. However, Smith failed to pay the fee required to file a lawsuit in federal court. United States District Judge Jose L. Linares was assigned to the case. JudgFe Linares issued an order instructing Smith on how to file for indigent status to waive his filing fee and dismissed his lawsuit without prejudice. After several rounds of filings involving Smith claiming that Judge Linares was violating his constitutional rights, Judge Linares denied Smith’s motion to proceed in forma pauperis. Smith and Judge Linares never met in person and had no relationship outside of the court case.

    On December 21, 2016, Smith attempted to record three separate liens against several individuals at the Manatee County Clerk’s Office. One of the documents claimed that Judge Linares owed Smith $750,000 for violating his constitutional rights.

    Furthermore, Smith claimed an interest in all of Judge Linares’s real and personal property and his checking and savings accounts up to the amount of $750,000. The other two documents were liens totaling more than $1 million against the State of Florida and several New Jersey government officials, including Governor Chris Christie. The deputy clerks refused to record the documents.

Real Estate Operator Gets 21 Months Prison Time, $325K In Criminal Fines For Role In Bid-Rigging Public Auctions At Northern California Foreclosure Sales

From the U.S. Department of Justice (Washington, D.C.):
  • After being convicted at trial, a Northern California real estate investor was sentenced today [July 26] for his role in a conspiracy to rig bids at public real estate foreclosure auctions, the Department of Justice announced.

    Alvin Florida Jr. was charged on Nov. 19, 2014, in an indictment returned by a federal grand jury in the Northern District of California. He was convicted on Dec. 15, 2016, of conspiring to rig bids at foreclosure auctions in Alameda County. Today, Florida was sentenced to serve 21 months in prison and to serve three years of supervised release. In addition to his term of imprisonment, Florida was ordered to pay a criminal fine of $325,803.

    Between May 2008 and December 2010, Florida conspired with others not to bid against one another, but instead designated a winning bidder to obtain selected properties. The members of the conspiracy then held second, private auctions to award the properties to members of the conspiracy and determine payoffs for other conspirators who had agreed not to bid against each other at the public auctions. The private auctions often took place at or near the courthouse steps where the public auctions were held.

    The primary purpose of the conspiracies was to suppress and eliminate competition in order to obtain selected real estate offered at Alameda County public foreclosure auctions at noncompetitive prices. When real estate properties are sold at public auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with the remaining proceeds, if any, paid to the homeowner.

    The sentence announced today is a result of an ongoing investigation into bid rigging at public real estate foreclosure auctions in California’s Alameda, Contra Costa, San Francisco and San Mateo counties.

Sunday, July 30, 2017

Client Victimized Out Of $1 Million Among Those To Receive $1.3 Million From Lawyer Who Admitted To Fleecing Them Of Money Held In Trust; Defendant Gets Five Years State Prison Time, Agrees To Sell Home, Office & Apply Proceeds Towards Restitution Payments To Ripoff Victims

In Jasper, Georgia, WAGA-TV Channel 5 reports:
  • A disgraced attorney in Pickens County admitted stealing more than one million dollars from his clients, blaming his crimes on "greed and stupidity."

    Authorities say Mark Miller's victims are simple country folks who trusted him with their financial future. Instead, he stole their money and vacationed at Disney World.

    "It's a slap in the face," pointed out Pickens County District Attorney Alison Sosebee. "There is no way that he would have been able to afford the lifestyle he lived without the money that he had taken from his clients."

    For years Mark Miller's law office was a familiar landmark in the heart of downtown Jasper. One of his clients was Katie Parker, whose family worked long, difficult hours managing a convenience store. When they died they left Katie with a trust fund of at least $1 million.

    But when she couldn't get Miller to explain how much was in the fund, she took him to court and filed a criminal complaint.

    That's when Miller's secret spending finally came to light.

    He lived in an $800,000 home, his Facebook page filled with pictures of him vacationing at Disney World and other places. Miller pled guilty to thirteen counts of theft by deception, theft by taking, theft by conversion and financial transaction card fraud. District Attorney Sosebee said Miller told the court he spent as much as $40,000 of clients' money just on those trips to Disney World, blaming "greed, stupidity and wanting to live a lavish lifestyle."

    Miller's clients were counting on those funds. Katie Parker lives in an aging ranch house with window AC units fighting a losing battle with the Georgia summers.

    "She's certainly not living in an 800-thousand dollar home and taking trips to Disney Land," Sosebee complained.

    As part of his guilty plea, Miller agreed to sell his expensive home and Main Street office and use most of the money to pay the $1.3 million dollars owed to his victims. Almost all of that restitution -- $1 million -- will go to Katie Parker.

    Miller was sentenced to 40 years, five to serve in state prison.

Attorney Faces Up To Two Years Jail Time For Role In Purloining Millions From Trust Account, Fleecing One Client Out Of $1.7 Million In Home Sale Proceeds; Bar's Insurance Fund Coughed Up $3.5 Million In Victim Reimbursements So Far As Cops Peg Total Swindle At $5 Million

In Calgary, Alberta, CBC News reports:
  • The prosecution wants former Calgary lawyer Floyd Campbell to spend 18 to 24 months in jail for his role in a real estate scheme that swindled investors out of millions of dollars.

    Peter Mackenzie told provincial court judge Anne Brown that a conditional sentence should not be made available to Campbell because of the breach of trust the former lawyer engaged in.

    Campbell stole $225,000 from an investor to help finance a fledgling development in Mexico. The money was supposed to be held in Campbell's trust account.

    He was originally charged with 30 counts of fraud and theft but pleaded guilty to just one count of theft involving the $225,000 from SWA Holdings Inc.
    His lawyer, Derek Jugnauth, told the court Campbell has paid $427,000 in restitution and is trying to sell his Mexican properties to settle outstanding claims from investors. It's unclear exactly how much Campbell owes his former investors.

    Campbell admitted to the Law Society of Alberta that he misappropriated at least $3.5 million. The money was taken from investors who had provided funding for various bridge financing deals involving homeowners who had no knowledge their properties were being used in the scheme.

    Campbell also admitted to forging the signature of his former business partner, Brandon Antonini, on numerous occasions.
    The law society's insurance fund paid out $3,527,854 related to six claims from investors. In 2015, the law society said it had received 22 complaints alleging misappropriation.

    Calgary police pegged the total amount of money stolen from investors at $5 million.

    Campbell was disbarred in April 2015.

    One of the complaints involved the sale of a property in northwest Calgary. Campbell admitted to misappropriating $1.7 million from the sale of the home to finance his business interests, including the real estate project in Huatulco, Mexico.

    Instead of forwarding the proceeds from the house sale to the sellers, Campbell left the province and moved to Winnipeg.
For the story, see Disgraced and disbarred, former Calgary lawyer faces up to two years in jail for theft (Floyd Campbell apologizes for his role in real estate scam that cost the Law Society of Alberta $3.5M). ripoff reimbursement

Florida Supremes Order Emergency Suspension Pending Further Probe For Lawyer Accused Of Dubious Dealing$ Involving Over $250K Belonging To Aging, Vulnerable Clients

In Tallahassee, Florida, the Florida Record reports:
  • Clermont attorney Dennis L. Horton has been suspended until further order following a May 3 Florida Supreme Court order for allegations of financial irregularities involving elderly clients and using trust funds to cover operating account overdrafts.

    A state bar investigation turned up "significant overdrafts" in Horton's operating account in 2015 and 2016, according to the petition for emergency suspension filed by the Florida State Bar. "Finally, [Horton] obtained improper loans from elderly clients to cover overdrafts in his operating account and to cover personal and business expenses," the petition said.

    The state bar announced the discipline June 29. The emergency suspension was authorized by state bar Executive Director John "Jack" Harkness Jr., whose successor, former FBI special agent Joshua Doyle, was announced in early June.

    Horton was admitted to the bar Dec. 20, 1974. He had no other discipline before the state bar in at least 10 years.

    The state bar's audit of Horton's operating and personal checking accounts from July 1, 2013, through Dec. 31, 2016, revealed repeated and significant overdrafts, according to the petition, according to the petition. Horton's operating account incurred overdraft fees of $5,565 in 2015 and $6,265 in 2016, according to the petition.

    Horton also engaged in questionable financial transactions involving elderly clients, including using power of attorney in August 2016 to move $30,000 from the checking account of a 75-year-old client in deteriorating health into his trust account.

    Other allegations in the petition included a $90,000 loan to Horton from a 74-year-old client and checks totaling $139,540 over about two years issued by Horton from the checking account of an 85-year-old assisted living facility resident into the operating account.

    Horton "has caused, or is likely to cause, immediate and serious harm to clients and/or the public and that immediate action must be taken for the protection of the respondent's clients and the public," the petition said.

    The conditions of Horton's emergency suspension include not disbursing or withdrawing trust account money without approval from the Florida Supreme Court.

Despite Returning Substantially All Of The Loot, Since-Disbarred Lawyer Gets 14 Months For Pilfering Nearly $500K From Clients; Funds Included Cash Left In Trust By Dead Clients Intended For Charitable Donations In Their Memory

From the Office of the U.S. Attorney (Brattleboro, Vermont):
  • The United States Attorney for the District of Vermont announced that William O’Brien, 60, a former attorney who lives in Winooski, was sentenced today [July 19] in United States District Court in Brattleboro to 14 months of imprisonment following his guilty plea to a charge of mail fraud. U.S. District Judge J. Garvan Murtha also ordered that O’Brien serve a one-year term of supervised release following completion of his prison term and pay restitution totaling $19,699. The court ordered that O’Brien surrender to the Bureau of Prisons on September 5 to begin serving his sentence.

    On October 13, 2016, the United States filed a criminal information charging O’Brien with one count of mail fraud, the charge to which O’Brien pled guilty. The information charged O’Brien with defrauding two former law clients.

    In one case, O’Brien became the trustee of a trust established by the clients. As trustee, O’Brien was to use trust funds to make charitable contributions in the memory of the clients. Between 2008 and 2013, O’Brien did make a number of contributions of trust funds in the total amount of $97,500, but also improperly diverted about $139,000 in trust funds to his law firm account.

    In another case, O’Brien received in his capacity as attorney more than $247,000 in client funds, which were also meant to be used for charitable purposes. Although O’Brien did make one contribution of $15,000, he again used the remaining funds for his own benefit.

    In early 2016, O’Brien did repay about $472,000 to these two clients, but those payments were made only after O’Brien became aware he was under investigation by counsel for the Vermont bar. The Vermont Supreme Court suspended O’Brien’s law license in January 2016 and disbarred him last December.

    In addition to defrauding the two clients referred to in the charging information, O’Brien also misappropriated smaller amounts of money from five other clients. The court’s restitution order requires O’Brien to repay those clients in full.

Victim Count For Attorney Accused Of Fleecing His Clients Out Of Entrusted Money Now Up To 17, But DA Believes There May Be Others

In Montgomery County, Pennsylvania, The Mercury reports:
  • A Montgomery County attorney has been disbarred and charged with additional offenses after more victims claim they paid for legal work that was not performed.

    The Montgomery County District Attorney’s Office announced that additional charges have been filed against Patrick J. Bradley, 45, of Collegeville, who was originally arrested on April 10 on other charges. Those charges included multiple felony and misdemeanor charges related to the theft and misappropriation of $146,917.01 in client funds.

    Authorities said five more victims have come forward after news spread of the original charges. The victims claim they suffered losses after paying for legal work that was not performed or not fully performed as well as the misappropriation of funds overseen by Bradley. Their losses totaled $13,954.19, according to the District Attorney’s Office.

    Bradley had been authorized to use the money to pay the living expenses of a woman in a facility in Berks County. Authorities allege he instead used the funds from the five new victims to pay for items such as utility bills, restaurant and fast food meals, gas, cellular phone service, retail purchases and other personal items.

    “These victims believed they were paying for legal work by a reputable attorney who was in good standing and licensed,” said Montgomery County District Attorney Kevin Steele. “Instead, the defendant took money for work he was not authorized to perform, never fully performed or that he stole from funds he was to safeguard for the benefit of an individual. He took advantage of good people for his own gain.”

    Authorities said victims were given information about the Pennsylvania Lawyers Fund for Client Security, whose mission is to reimburse victims of attorney dishonesty in the practice of law.(1) A portion of the dues that every attorney pays to be licensed to practice law goes to the fund.

    The Montgomery County District Attorney’s Office said they have already located 17 victims but believe there may be others.

    Anyone with information about questionable legal interactions or use of their funds by Bradley is asked to contact the Montgomery County Detective Bureau at 610-278-3368.

    Bradley has been charged with dealing in the proceeds of unlawful activities, theft by unlawful taking, theft by deception, receiving stolen property, deceptive business practices, unauthorized practice of law and related charges. He was arraigned before District Judge Cathleen Rebar and is scheduled for a preliminary hearing on Aug. 22 again before Rebar. Bail was set at $50,000 unsecured and Bradley was released.
Source: Montco attorney faces more charges on illegal use of funds.
(1) The Pennsylvania Lawyers Fund for Client Security has a $100,000 maximum award per claimant. Effective February 24, 2014, there will be a $1,000,000 aggregate cap per attorney. The Board may, in their discretion, request the Supreme Court of Pennsylvania to permit payments of awards relating to one attorney to exceed the $1,000,000 aggregate cap. The decision to grant such a request lies solely with the Supreme Court of Pennsylvania.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.